The multimillion naira aviation fraud – Idris Akinbajo

There is clear mismanagement, fraud and abuse of due process in the way Nigeria’s aviation agency is run

The Federal Airport Authority of Nigeria has been a drain on the nation’s economy as millions of naira is lost to phony deals and contracts executed by the agency’s management, an investigation by this newspaper has shown.

According to documents available to us (documents available for download below this story), George Uresi, the managing director of the agency; and his predecessor in office, Richard Aisuebeogun superintended over a system where millions of naira belonging to the agency were wasted on dubious and phony trips and inflated purchases.

Two issues best describe how the FAAN is being managed. The first is a shady training programme, through which exotic cars were purchased at highly inflated prices and a hefty N75 million was siphoned to private pockets.

The shady training

On Monday, April 18, 2011, Richard Aisuebeogun, the then Managing Director of the Federal Airports Authority of Nigeria (FAAN) wrote a letter to the chairman of the board of the agency. Titled “Year 2011 overseas training business plan,” the letter sought the approval of the board to spend 918million naira for staff training, travels and exchange programs.

Two weeks later on May 2, 2011, the board, through its secretary, B.I. Gold responded to Mr. Aisuebeogun saying “the governing board has approved the 2011 FAAN business plan for implementation.”

On June 20, 2011, seven weeks after the board’s approval, Salamatu Umar-Eluma, who works as General Manager in charge of training at the agency, wrote to the director of finance about the cost implications of the trip.

“I wish to forward the attached list of nominees and cost implication to your office for implementation,” Mrs. Umar-Eluma said.

A total of 141 million naira was approved for the training programme by the finance director at an exchange rate of N152.97.

No training, no refund

The training for which this money was approved was to be held in South Africa. Money released was for two categories of payments. The first category involved the payment of registration fee to the training company at $6,000 per trainee for 84 people. A total of $504,000 (76.6million naira) was made for this payment.

The second payment was a total of $416,000 (63 million naira) which was earmarked as estacode for each of the 84 participants. An average amount of $425 (65 thousand naira) per day was to be paid to each staff embarking on the training programme.

However, the training didn’t hold. It was cancelled due to what FAAN officials describe as “visa problems.”

Despite the cancellation of the programme, and almost a year since the payment of the registration fee, no refund has been made has been made to the agency.

“The whole training was suspicious, even the trainers. Up till now, they have not refunded our registration fee,” said a highly placed source at the agency.

The source also questioned why a company reported to be a travel agency in South Africa would be contacted to train aviation personnel.

“Why should a government agency and regulator be trained by a travel agency?” he asked rhetorically.

Why South Africa?

Different sources confirmed that Mr. Uresi who was then the Director of Operations at the agency was behind the choice of South Africa and the “trainers.” Mr. Uresi worked at the South African Airport Authority after leaving ADC airlines. Some of his staff are suspicious that he has business links in the country including with the travel agency. That could however not be independently confirmed by this newspaper.

The choice of SA and the decision to pay such a huge amount also appear dubious given that FAAN has an arrangement with Miami airport in the USA, which allowed for free training of FAAN staff.

“Everybody knew about the Miami airport partnership. In fact, some years ago, some of our staff were trained there for free. We were shocked when we were told we had to pay such an amount to a travel agency for training in South Africa,” said another staff of FAAN.

After the botched South African training, the FAAN management reverted to Miami airport where the staff were again trained for free.

At about the time FAAN was was making shady payments to an “inexperienced” South African firm, the agency was also buying vehicles from a Nigerian company at inflated prices.

The Toyota largesse

On June 8, 2011, M/S Sanguine Nigeria Limited received a purchase order from FAAN. The company’s task was the “supply of operational vehicles and installation of” Toyota vehicles. The vehicles (12 camry’s, six corollas, six hilux, two prados), all with the highest configurations such as leather seats and full alloy wheels, were to be supplied at a cost of 246 million naira.

If FAAN had allowed for competitive bidding or purchased from accredited Toyota dealers like Briscoe Motors or Elizade Motors, at least 25 per cent of the sum would have been saved; a market survey has shown.

A check at Briscoe motors shows that the Toyota Corolla 2011 model with 1.8 litre engine, leather seats and the exact specifications contained in the purchase order now cost 4.8 million naira per unit. They cost even less when the purchases were made. On the purchase of six units at 6.4 million naira per unit, FAAN could have saved at least 10.8 million naira.

Also , the purchase of 12 units of 2.4 litre engine Toyota Camry at 10.2 million naira would have saved the agency at least 24.6 million naira if it had been bought at a present market price (which is significantly higher than last year’s) of 8.15 million naira.

Violating due process

The recent action of the FAAN leadership on the appointment of a concessionaire, Société Internationale de Télécommunications Aéronautiques (SITA), also shows how the FAAN management ignores due process in its decision making.

Following the controversial termination of the contract FAAN had with Maevis Limited, a new concessionaire was needed. Maevis had been appointed to improve the system for managing passenger and aircraft handling.

Maevis finally won the bid in 2007 after competitive bidding involving three other companies including SITA and SH consortium. Unlike in 2007 however, no competitive bidding was done in the new contract with SITA. This is a clear violation of the Public Procurement Act 2007, which stipulates that all purchases of goods and services by the Federal Government and any of its agencies should be through due process particularly by competitive bidding. Public officials who violate the act are liable to between five and 10 years imprisonment.

We did no wrong

Akin Olukunle, the general manager, public affairs, of FAAN, says his agency did no wrong in its dealings.

Mr. Olukunle, who confirmed that the training in South Africa did not hold, could not say much about the finances of the proposed trip.

“How the transaction went, I cannot say. I will need to confirm with the finance guys.”

As at the time of publishing this report, Mr. Olukunle was yet to keep his promise to revert back on his findings.

On the inflated purchases of vehicles, Mr. Olukunle said his agency bought the cars from an accredited dealer. He could not explain why there was no competitive before the contract was awarded.

“We don’t go to unaccredited dealers for purchases.” he said.

When asked if he was aware that all the vehicles were purchased at prices far above market prices, Mr. Olukunle distanced himself from the deal saying “I am not an auditor. They (the purchases) went through the auditor.”

While commenting on the absence of competitive bidding in the concession arrangement with SITA, Mr. Olukunle again absolved his agency from any blame.

“There are many approaches to due process. Some in terms of advertising, some in terms of internal arrangement,” he said, adding that though there was no bidding, the agency got requisite approval from the Minister.

“We have the approval of all the concerned authorities,” said Mr. Olukunle. “For additional information, you can contact the office of the honourable minister who is championing the modeling of the airport.”

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